PART 1: Nomad Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2021: Taxable Income Federal Income Tax Liability Paid Tax-Exempt Interest Income Excess of Capital Loss over Capital Gains Section 179 Expense elected in 2021 Dividends Received from Domestic Corporation (less than 20% owned) MACRS Depreciation deduction Straight-line depreciation using ADS class lives $295,000 3,000 7,000 69,300 15,000 40,000 18,000 10,000 Compute Nomad's E & P for tax year 2021 PART 2: On June 30th, Nomad Corporation distributes $100,000 to Jack and Jill, who each own 50% of the corporation. At the beginning of the current year, Nomad corporation has a deficit in accumulated E&P of $(53,000). Using the figure for current E&P that you calculated for Nomad Corporation, determine the tax treatment of distribution for the shareholders. (assume each shareholder has adequate basis in the corporation).
PART 1: Nomad Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2021: Taxable Income Federal Income Tax Liability Paid Tax-Exempt Interest Income Excess of Capital Loss over Capital Gains Section 179 Expense elected in 2021 Dividends Received from Domestic Corporation (less than 20% owned) MACRS Depreciation deduction Straight-line depreciation using ADS class lives $295,000 3,000 7,000 69,300 15,000 40,000 18,000 10,000 Compute Nomad's E & P for tax year 2021 PART 2: On June 30th, Nomad Corporation distributes $100,000 to Jack and Jill, who each own 50% of the corporation. At the beginning of the current year, Nomad corporation has a deficit in accumulated E&P of $(53,000). Using the figure for current E&P that you calculated for Nomad Corporation, determine the tax treatment of distribution for the shareholders. (assume each shareholder has adequate basis in the corporation).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Plz answer part 1 & 2

Transcribed Image Text:PART 1: Nomad Corporation (a calendar year, accrual basis taxpayer) had the following transactions
in 2021:
Taxable Income
$295,000
Federal Income Tax Liability Paid
69,300
Tax-Exempt Interest Income
3,000
Excess of Capital Loss over Capital Gains
7,000
Section 179 Expense elected in 2021
15,000
Dividends Received from Domestic Corporation (less than
40,000
20% owned)
MACRS Depreciation deduction
18,000
Straight-line depreciation using ADS class lives
10,000
Compute Nomad's E & P for tax year 2021
PART 2: On June 30th, Nomad Corporation distributes $100,000 to Jack and Jill, who each own
50% of the corporation. At the beginning of the current year, Nomad corporation has a deficit in
accumulated E&P of $(53,000). Using the figure for current E&P that you calculated for Nomad
Corporation, determine the tax treatment of distribution for the shareholders. (assume each
shareholder has adequate basis in the corporation).
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